Industry · 02/05
Regional banks.
Asset profiles between $10B and $100B. CCAR, DFAST, heightened standards, and an examination cadence that does not pause.
Asset profiles between $10B and $100B. CCAR, DFAST, heightened standards, and an examination cadence that does not pause.
$10B is not a number — it's a regulatory regime change.
Crossing the $10 billion threshold pulls a bank into a different regulatory universe: the CFPB as a direct supervisor, heightened standards under OCC Heightened Standards or its FRB equivalent, DFAST stress testing, and an examination cadence that is no longer episodic. The institution that arrived at $10.1B is not yet the institution it needs to become to live there.
Our practice for regional banks (typically $10B–$100B in assets) is built around three transitions: building a risk and control infrastructure proportionate to the new regime, validating the models that the regime now requires (CCAR/DFAST loss forecasting, AML detection systems, AI/ML underwriting), and running an internal audit function that the audit committee can rely on as a true third line.
The pace is the hardest part. A regional bank is being examined for something somewhere on most weeks of the year. Our presence is calibrated to that — we are not the firm that arrives, leaves, and returns six months later.
The bank's DFAST submission for loss forecasting was returned with a finding that conceptual documentation was insufficient for the FRB to assess model risk. The model itself was sound; the documentation was not. We were engaged to perform the validation that should have accompanied the original submission, document the methodology to the standard the FRB had cited, and present the results to the model risk management committee. Edgar led; the partner who validated also briefed the committee.